Anadarko Petroleum Corporation (APC), yesterday, disclosed its 2011 outlook and capital program. The company targets increasing sales volumes of about 244 – 248 million barrels of oil equivalent (MMBOE) in 2011, compared with net sales volumes of 235 MMBOE in 2010. Moreover, the company expects the high-margin liquids volumes to grow by 10% in 2011.
In the first quarter of 2011, the company expects sales volumes to be in the range of 62 – 62 MMBOE, with liquids volumes of 278 – 289 thousand barrels per day.
Anadarko also outlined its 2011 capital expenditure plans projecting total 2011 capital spending of roughly $5.6 – $6.0 billion. The company said that its 2011 capex plan is well within the anticipated cash flow, which will allow accelerate the proved reserve additions with a reserve-replacement ratio of more than 150%.
On geography, Anadarko’s 2011 capital budget has been divided into four parts, with about 55% for U.S. Onshore operations, 25% for International projects, 10% in the Gulf of Mexico and 10% for Midstream and other projects. Further, based on activity types, the company expects to spend about 40% of the capex for the expansion of the company’s near-term base, 25% on exploration projects, 15% for its sanctioned mega projects, 10% on Shale development and 10% for Midstream and other initiatives.
With a focus to increase its Shale exposure, Anadarko has significantly increased drilling activity, expanded infrastructure and secured the necessary service agreements to facilitate rapid growth in the Eagleford and Marcellus shale plays. During 2011, Anadarko expects to accelerate growth in the shale plays and, by year end, it expects shale production to account for approximately 10% of the company’s total daily sales volumes.
Additionally, Anadarko will continue to invest capital in several other emerging U.S. onshore oil plays including, the Bone Spring, Avalon Shale and Wolfcamp plays in the Permian Basin of West Texas, and the horizontal Niobrara play, within the company’s Land Grant acreage in northeastern Colorado and southeastern Wyoming.
Among its mega projects, Anadarko continues to expand capacity at the Jubilee field offshore Ghana, aiming to increase capacity to 120,000 gross barrels of oil per day during the year. Anadarko also has development activities in progress at two other sanctioned mega projects – Caesar/Tonga in the Gulf of Mexico and El Merk in Algeria – both of which are expected to generate oil for the first time in 2012.
On the exploration front, the company expects to invest about $1 billion in drilling activities with a focus on its worldwide offshore and deepwater programs. Africa will continue to be a primary focus area with 12 to 15 wells planned in West Africa, and another three to five wells planned in the Rovuma Basin offshore Mozambique.
Anadarko’s total capital spending in the first quarter of 2011 is expected to be in the range of $1.3 – $1.5 billion.
By achieving these objectives, the company expects to be on track to reach its five-year target of growing sales volumes at a CAGR of 7%- 9% and surpassing 3 billion BOE of proved reserves by year-end 2014.
Based in The Woodlands, Texas, Anadarko Petroleum is primarily engaged in the exploration, development, production, gathering, processing and marketing of natural gas, crude oil, condensate and NGLs. The company primarily competes with ConocoPhillips (COP) and Exxon Mobil Corp. (XOM).
Anadarko currently has a Zacks #3 Rank (short term Hold), which supports our ‘Neutral’ recommendation on the stock.
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